Modern electric grids include many generation and transmission resources used to provide power to different types of customer loads. Generation and transmission resources may include generators, transmission lines, sub-stations, reclosers, transformers, etc. These resources, and different instances thereof, have different capabilities, settings, and limitations. For example, each generation resource has a total as well as a marginal cost. Different combinations of transmission resources may allow specific customer loads to be connected to different generation sources, although increased physical distance between a generation source and a load may lead to reduced efficiency due to transmission losses.
Customer loads also come in different types, having different characteristics. For example, residential customers require power for heating and cooling equipment, such as heaters, air conditioners, etc., as well as for lighting, dish washers, hot water heating, clothes washers, etc. Business and industrial customers require power for lighting, computer and information systems, as well as for industrial machinery such as large and small electric motors, furnaces, etc. Each load has different and often unique characteristics. For example, different loads draw different levels of power (kW), reactive power (kVAR), and energy (kVA). Also, different loads have different temporal placements and reliability requirements, often based on the requirements of the customer.
Electric grid management attempts to match grid-connected generation and transmission resources to load. Existing management systems, however, are centralized, utility-operated mechanisms that are implemented in a one-way, top-down manner. According to the existing systems, generation output and grid configuration settings are determined centrally based on the information available to the central control mechanism and the preferences of the utility. Often, however, centralized control in this manner leads to sub-optimal financial and operational configurations of the electric grid because the centralized mechanisms fail to take into consideration the needs of some or all of the participants in the grid (e.g., customers and the utility).